KARACHI (Tehlka TV Report): Pakistan’s largest national oil company has become a total disaster than a contributor to the exchequer due to unabated corruption, financial embezzlement, inefficiencies and losses, apparently knowingly inflicted and intentionally.
PSO earns a pathetic less than 0.6% in Rs. 1.4 trillion annual turn-over. Installation of dishonest and inefficient MDs by oil mafia has been the major reason of downfall. Decision makers have been reduced to on-lookers and even submissive to the appointed MDs or CEOs.
Question arises as to what is really left in PSO supposed to be serving massive needs of Pakistan? The well known answer is: tales of corruption, disgraceful attitude of political appoints, pillage, increased financial problems, incompetent management, free for all plunder at all levels, lost market position and inability to shoulder national duties. Ability of armed forces to sustain war or emergency situations has been badly compromised while it is estimated that PSO might only be able to supply POL needs for a maximum of few days on sustained basis before the country becomes standstill.
Estimated corruption in 10+ years crossed Rs 2 trillion (exchequer loss) and PSO’s market share dropped from 74 to less than 37%. Valuation of GOP’s 51% direct and indirect shareholding reduced from a robust US$ 1-1.4 billion in 2008 to mere US$ 300 million excluding the receivables. Role of PSO’s finance department is reportedly been a key factor due to incompetence and incapacity to handle complex business issues. PSO finance department has thoroughly mismanaged the funds and ruined financial strength while taking short term loans for medium-long term obligations.
Surprisingly, none of the PSO Board of Managements since 2005 took notice of the pathetic financial side and taken actions. It would not be out of place to mention that majority of the members appointed on the PSO Board were political, illiterate, irrelevant and cases available that they were more interested in personal gains rather than company. In addition, now the new entrants in OMC business since 2001 are 15 or more and have gained at the PSO expense. Most of these OMCs have links with Ministry, politically connected people and PSO officials. There has been no noticeable effort by PSO to arrest the situation.
Khyber to Karachi on roads, rails, in seas and skies, common domestic, industry or power plants and defence needs including far flung areas, PSO has a role to play but absolutely unsatisfactory. It would not be too difficult to ascertain who has plagued corruption and financial & HR crimes in the roots of PSO? Illegal money flowing to ‘untouchable’ oil mafia is unstoppable. Unfortunately there is no sincerity to revive PSO where lives of millions of people directly/ indirectly are linked and affected.
Official documentations, GOP’s Public Audit reports, cases registered in FIA/NAB &FBR, internal & external enquiry reports, Board Audit reports, press/media videos andPress clippings, earlier TIP and intelligence reports etc. have revealed that the maincauses of PSO decline, in some order of importance have been irregular appointments including the incompetent heads; promoting and appointing people of choice; financial mismanagement; inability to steer the company through fierce market competition; insider trading to give benefits to competitors; patronage provided to corrupt through high ups including irrelevant Board; no accountability of real culprits and consequent corruption at all levels. It is on record that hard working professionals have been ignored and blue eyed are given important portfolios at times even after hiring from outside.
There are some extremely alarming facts unearthed about how rules of law are defected and even the cases against illegal appointments with proofs have been stalled by the powerful oil mafia. For instance, it is in public knowledge that even the Honorable Supreme Court of Pakistan was unable to assign an official number to a Petition filed over 7 months ago against the illegal appointments and corruption. Later it is reported that another earlier Constitutional Petition is pending in Islamabad High Court since February 2016 but the mafia has been visibly successful in not allowing the system to even allow first hearing (CP in IHC No. 2077-78/2015). It is evident from the pressure exerted on IHC officials by PSO that the case is very strong. If a decision was made in favor of the Petitioner and against illegal appointments in PSO including its current MD, huge losses to exchequer would have been saved. Probably Honorable Chief Justice of Pakistan may like to take a Suo Moto notice.
In further development that has exposed the deplorable state of affairs in country’s large Public Sector Entity PSO, the Honorable Sindh High Court (SHC) had submitted a Quo Warranto application P-6701/2016 concerning illegal appointment of PSO’s Managing Director, Sheikh Imranul Haque since September 1, 2015 whereas as per records the nomination initially was announced on May 11, 2015. The notices reportedly, as per the application are required to be issued to Federation of Pakistan, Secretaries of Ministries of Petroleum & Natural Resources, Establishment, Interior and Law & Justice Division, MD of PSO and famous DMD Finance of PSO.
It has been pleaded in the Petition with adequate proofs that all policies and procedures were flouted in appointments of MD Sheikh Imranul Haque and later on DMD Finance & IT Yacoob Suttar in far mysterious ways. It may be noted that the king makers in such appointments have taken law in their hands and have been forging sensitive summaries, misreporting to highest offices, uncalled-for maneuvering and justifying wrong doings.
Official documents revealed that the current MD of PSO operating since past 19 months does not have a single day profound experience in oil industry as required by the terms of appointment in various advertisements for the job and have not been exposed to any complex business environment before. Before becoming MD of PSO, Sheikh Imranul Haque was taken out of Engro mainstream and was placed in Engro’s non-performing subsidiary for about 9 years.
On the other hand, Haque appointment is a direct conflict of interest between Engro and PSO. Instances that have emerged include LPG handling business; now LNG, chemicals and PSO’s 30 year long Fuel Supply Agreement with Hubco, also owned by Engro. Another very alarming situation is that both Imranul Haque and Yacoob Suttar are shareholders of Engro whereas Yacoob Suttar is on the Exit Control List since August 2014 due to his malpractices, corruption and mismanagement of company and governmental funds from 2006 to 2014 and now from July 2015 till present. Government Public Audit had raised hundreds of billions of cases in PSO but no action has been taken by any authority so far.
Industry sources have also confided that most people who have purposely left PSO or been removed by last few and current managements have joined its competitors damaging the company in irreversible mode. Most alarmingly is the fact that MD is under investigation by NAB for his alleged involvement in US$ 200 million LNG scam whilst his old time friend DMD Finance is under investigation by FIA/FBR and his name is on ECL, yet both are allowed to continue in their positions. Apart from corruption and misuse of funds, most damage is reportedly done to PSO’s organizational structure by creating new positions and hiring irrelevant people on very high salaries. Even a person with beverages experience and owning a company in USA, has been hired as Senior GM Marketing. Same is the case with others whereas MD openly misbehaves with existing employees terming them as incompetents.
National oil company PSO, instead of shouldering its main responsibility towards economy, strategic defence needs and commoner, nosedived badly in almost every segments of business and is fast turning in to an obligation. Sources have confirmed that PSO has been continuously losing its market share over the past 7 years primarily due to placement of hand-picked individuals in the top slots but more damaging since July 2013 while completely losing the grounds to resist market competition. In past 7 years, over 15 OMC licenses have been issued to cronies and people with right contacts. It has since very easy for the new entrants to grab and gradually increase their market share to the detriment of PSO.
Information available in public domain depicts extremely vulnerable situation of PSO whereby the MD and DMD Finance are running one of the most important PSE of national value in whimsical manner. Official documents reveal that the MD spends more time on international travel and to Islamabad while his close aide DMD Finance officiates on sublet basis apart from handling 8 to 10 departments at a time. PSO is reportedly plagued by cronyism, incompetence; corruption at all levels running in to billions each day and HR abuse. The entire PSO employee base barring few, have raised concerns about the inhuman way in which both the MD and DMD Finance treat them. Who has authorized these two officials to mistreat employees and belittle them on daily basis would be interesting to know? Soon there will be a time when PSO will lose all working class due to maltreatment at the hands of MD, DMD Finance and few handpicked that includes at least three female officers with controversial records.
Ironically, the incomplete Board of Management is again toothless, reportedly submissive and only occasionally convenes to do what is dictated by the all expensive MD. It is also surprising that while government has been propagating “government has no business to be in business” and inculcation of “discipline, merit and ethics”, same has been openly breached. Last permanent MD of PSO was appointed on Rs. 2.2 million salary package plus some benefits whereas the package of current MD has now crossed Rs. 7 million excluding uncountable benefits. Company sources and documents reveal that the cash equivalent of salary package, TA/DA, bonuses, gratuity and leave fare assistance is well over Rs. 10.35 million excluding other non-cash benefits. Question arises as to why this is happening so blatantly when Sheikh Imranul Haque has unfinished corruption cases, appointment challenged in 3 courts of Pakistan and company has been badly ruined.
Another horrible hushed-up charge sheet against current MD is the totally unacceptable and terrible HSE record since his joining in September 2015. Record of accidents and mishaps is unstoppable primarily due to rudderless leadership and employees diminishing interest in executing a decent job. Hundreds of accidents have been reported with loss of human lives, property and image apart from work delays. One of the drastic accidents happened in 2016 at PSO’s Zufiqarabad Oil Terminal near Pipri during repairs of a storage tank namely T-1902 with 24,000 MT capacity. The Contractor was allowed to complete the massive repairs in about 9 months. Totally oblivious to the safety, labors, work sequence aspects, the MD using his unlimited powers sternly instructed to finish the job in 3 months.
Since this was humanly not possible, the labor was allowed to work bypassing the most essential work sequence. As a result of this negligence, there was work done simultaneously on the floor and roof of the ill-fated tank. An accident happened and 2 workmen died apart from injuries and work stoppage. Reportedly a committee was later made with a pre-planned agenda to wrap up the matter and make many employees scapegoats with varying levels of punishments that reportedly were demotions, stoppage of promotions and increments. As a matter of fact, the sole reason of the accident and loss of precious human lives was instructions of MD to complete a 9 months industrial work in mere 3 months. In all fairness, a clear case of criminal negligence exists against the MD PSO, Sheikh Imranul Haque.
Director General Commercial Audit & Evaluation of Government of Pakistan (GoP) has been issuing the audit reports of PSO accounts but nothing happens despite the fact that numerous Paras have been found criminal in nature. Audit report as an instance for the financial year 2014-15 has in all selective 48 items with minimum loss to PSO or exchequer on account of incompetence, inefficiencies and corruption to the tune of Rs. 108.4 billion. Another report earlier for the financial year 2012-13 had corruption tales totaling almost 199 billion. It is reported that the similar report for the financial year 2015-16 also contain hundreds of billions of cases apart from many white collar cases of substantive impact on PSO, exchequer and the economy.
Another very big case of criminal negligence is the illegal appointment, promotions and irregular elevation of Jahangir Ali Shah to the position of DMD Operations. He is the same person who unlawfully got himself appointed as MD PSO on look after basis in 2011 due to extreme political pressure and played havoc with company resources in 11 months. GoP Audit Para is available on his illegal appointment, no proofs of recommendations for promotions, numerous warnings for his below average or poor performance etc. Shah is also not only on ECL but he is suspended since early 2015 for his involvement in petrol crisis. A charge sheet also exists as of 2013 for his maneuvering US$ 3 million corruption in base oil import scam. Due to his political connections, outside phone calls to PSO management by a certain party in Sindh and resources at his disposal, both his corruption and mismanagement cases in investigative agencies are either slowed down or ignored by successive PSO managements, Boards and even the Ministry. Current Minister is also reported to be a close friend of an MNA who has openly supported Shah.
Concluding notes:
It is extremely critical that strategic importance of PSO be maintained which unfortunately is not the case now due to political influence, influx of corrupt and incompetent employees at important positions, unending appetite for acquiring illegal money by politicians/ministry officials and oil mafia from PSO directly or through appointed cronies, intentionally losing business to competitors for personal gains, financial embezzlement via banks etc.
- PSO is a key national strategic asset supplying variety of fuel products to the entire country including far flung and border areas; need identified for additional storages in the locations of importance.
- PSO still holds majority market share in all products (domestic, industrial, marine & aviation, armed forces, railways and transportation) although much reduced
- Most of the PSO installations are declared Key Point Installation and hence require plans with fool proof measures against safety and security
- GOP hold majority shares in PSO; nominates two directors on Board of Management. PM is the final authority for appointing MD & Board Directors
- Extreme nature outside influence impacting PSO’s lead in oil market and ability to contribute meaningfully towards profitability; posts poor results each year
- Illegal employments, both permanent and outsourced resulted in senior and junior management working for outsiders rather than the company
- Massive financial corruption eroded PSO’s balance sheet and profitability apart from damaging the otherwise inevitable returns to exchequer
- Fast deteriorating image of PSO impacting GOP’s resolve to weed out inefficiencies, corruption, nepotism and plunder etc.
While above abundantly clarifies that change in leadership position in PSO is extremely important at this stage, massive crackdown is required to suspend PSO employees who are known for their open corruption and sheer incompetence. PSO must be saved now without any lapse of time to:
- Safeguard its strategic importance for the country and armed forces
- Safeguard what is left in terms of market share, infrastructure, human resource, balance sheet (and capacity to regain leadership position) before it is unlawfully privatized for peanuts of its actual value. The acquirers of PSO will spin-off assets at premiums.
- Be able to stop all ill-planned activities that are hurting PSO to supply and distribute oil products to entire length and breadth of the country as its national obligation; more so at times of emergencies and national calamities.
- Relieve PSO from the clutches of oil mafia, planted vendors/suppliers and people working against the interest of PSO and Pakistan.
If this government has any intention to safeguard the key public sector entity PSO, the MD and DMD positions have to be immediately vacated and their tenures are thoroughly investigated.
